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Opinion

Budget 2019 – Poor wording requires 2 ex-spouses within 5 years for Home Buyers Plan

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  • This is one of those rare times I hope I am wrong in my interpretation, and look forward to being proven wrong by my professional colleagues.

    On March 19, 2019 the federal government tabled its election-year budget. One of the newest and strangest provisions is the ability for people going through a separation or divorce to potentially have access to their RRSP under the Home Buyers Plan.

    Now in my article and podcast entitled: “Escape Room – The NEW Small Business Tax Game – Family Edition” with respect to the Tax On Split Income (TOSI) rules, I made a tongue in cheek argument that people will be better off if they split, because then the TOSI rules won’t apply.

    In keeping with the divorce theme, beginning in the year of hindsight, 2020, the federal government is giving you an incentive to split up and get your own place.

    However, there are a few hoops:

    On page 402 of the budget, under new paragraph 146.01(2.1)(a), at the time of your RRSP withdrawal under the Home Buyers Plan, you must make sure that:

    • – the home you are buying is not the current home you are living in and you are disposing of the interest in the current home within two years; or
    • – you are buying out your former spouse in your current home; and

    you need to:

    • be living separate and apart from your spouse or common-law partner;
    • have been living separate and apart for a period of at least 90 days (markdown October 3, 2019 on the calendar),
    • began living separate and apart from your spouse or common-law partner, this year, or any time in the previous 4 years (ok, you don’t have to wait for October); and…

    …here is where the tabled proposed legislation gets messy.

    Proposed subparagraph 146.01(2.1)(a)(ii) refers to where the individual

    • wouldn’t be entitled to the home buyers plan because of living with a previous spouse in the past 4 years that isn’t the current spouse they are separating from

    “(ii) in the absence of this subsection, the individual would not have a regular eligible amount because of the application of paragraph (f) of that definition in respect of a spouse or common-law partner other than the spouse referred to in clauses (i)(A) to (C), and…”

    The problem with the wording of this provision, is that it is written in the affirmative by the legislators using the word “and”. This means, you must be able to answer “true” to all the tests for the entire paragraph to apply.

    The way I read this, the only way to answer “true” to this subparagraph is if you have a second spouse (ie: spouse other than the spouse referred to) that you shared a home with and you split from in the past four years.

    If you have a second spouse that you shared a home with in the past four years, then “paragraph (f)” in the definition of “regular eligible amount” would apply and the answer would be “true”.

    If the answer is “true” you can then get access to your RRSP Home Buyers Plan.

    If you don’t have a second spouse then, even though “paragraph (f)” might be met, the phrase “spouse other than the spouse referred to” would not be met, and therefore the answer would be “false”.

    This would, in turn, cause the entire logic test of the provision to be “false” and so you would not be able to take out a “regular eligible amount” from your RRSP for the Home Buyers plan because you do not meet the provisions.

    If my interpretation is correct then I would really be curious as to what part of the economy they are trying to stimulate.

    In my opinion the legislation could be fixed with a simple edit:

    “(ii) in the absence of this subsection, the individual would not have a regular eligible amount because of the application of paragraph (f) of that definition in respect of:

    (A) a spouse or common-law partner; or

    (B) a spouse or common-law partner other than the spouse referred to in clauses (i)(A) to (C); and…”


    Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr is the President & Founder of CGL Strategic Business & Tax Advisors; you can find out more about Cory’s biography at http://www.CGLtax.ca/Litzenberger-Cory.html


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    Opinion

    3 wards for the city based on federal and provincial governance models.

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  • An interesting proposal has been suggested for our municipal governance that is modeled after the provincial and federal electoral system.
    Federally we have Members of Parliament (MPs) and one of them is also the Prime Minister. Provincially we have Members of the Legislature (MLAs) and one of them is also the Premier.
    Federally our fine city is divided into 2 electoral districts or ridings both federally and provincially, so we have 2 MLAs and 2 MPs, and anyone could also be our Premier or Prime Minister, or Speaker, Cabinet Member, or Opposition Leader.
    Back to our city’s governance, we elect 9 people currently, 8 councillors and 1 mayor for 1 electoral district. The idea being suggested is 3 wards, 3 councillors each with 1 also being the mayor.
    Population wise and geographically 3 wards would be fairly easy. Using the last municipal census. Approximately 1/3 the population lives east of 30th Avenue so that would make an easy boundary and approximately 1/3 live north of the river, another easy boundary. The other 1/3 would be south of the river and west of 30th Avenue. Easy and already done.
    Now, why would we consider 3 wards over governance of a single entity?
    Look at thhe history of the wards, the services offered, crime rates, return on investments and you can see the reason.
    The east of 30th Avenue ward has, 3 high schools with plans for 2 more, has the Collicutt centre with a recommended site for the next multi-use aquatic centre, 2 emergency services location, and a pickle ball court centre.
    The north of the river ward has no high schools with no plans for any, the Dawe recreation centre, YMCA, and 1 emergency services centre.
    The other ward has 1 high school, 1 college, downtown recreation centre, museum, tennis courts, Michener pool, Westerner, Kinex arenas, curling rinks, a proposed cultural centre, hospital, multiple emergency services to name but a few.
    So it is easy to see the rationale behind and the appeal for a ward system as our city grows in a manner favourable to some and not to others. 3 wards with 3 councillors each and 1 of the 9 would also act as mayor. It works provincially and federally and it would make councillors responsible and accountable for any continued disparities, right?
    It is an option. Just saying.


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    Opinion

    Will Red Deer finally get a seat at the adult table? Do we want a seat at the adult table?

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  • Opinion by Garfield Marks

    “Red Deer needs a Cabinet Minister“, says the Chamber of Commerce. Yes the fact is we need a seat at the table, but do we have a politician worthy enough to sit at the adult table?

    Yes, I believe we do, at least 2. For far too long, Red Deer has been electing invisible politicians, seat warmers, trained seals, caricatures of what we think we want as politicians. People representing in some shallow way what the population wanted, perhaps we want invisible politicians. But that is not what we need.

    The subject came up due to the recent Provincial election but it is the same in all 3 levels of government. Federally, too like Provincially there is a cabinet table that makes the decisions and sets directions and implementation but there is a somewhat cabinet like table municipally, involving a few people including city manager, mayor, downtown reps, developers and others, that kind of set the game plan, at least in my opinion.

    This came up over coffee one day, started when someone asked who decided to spend almost a million dollars of our taxes on a piece of art off 32 Street saying “Welcome to Red Deer”?

    The hypothesis is that there is an inner circle or small group, not city council, that decides what, where and when to do anything in this city. Which subdivisions to build as we seem to be opening up new subdivisions every year while we have trouble filling the ones already on the market, means there must be at least one developer at this table.

    The question remains then about whether the citizens of Red Deer want a seat at the adult table? Do we accept just paying the bills as our only role?
    We spend millions and millions of dollars every year on politicians, for what? Photo ops, ribbon cuttings, welcome speeches and to vote as they are told by the members at the adult tables.

    Will we get a Cabinet Member from Red Deer? I think we might but just 1 at the Provincial Cabinet level, because the table is small and Red Deer is not seen as a major player needing to be heard. As for federal and municipal tables that is not even on the horizon. Just saying.

    The views in the above story are the opinion of the writer’s. 


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